CPC Reports Increase in Net Earnings

Managing to thrive within a troubled industry, Community Psychiatric Centers said Tuesday that its net earnings rose 15.6% to $83.2 million in fiscal 1990, up from $72 million a year earlier.

The company, which operates a chain of psychiatric hospitals, said revenue for the year ended Nov. 30 rose to $381.79 million, up 15.5% from $330.72 million a year earlier. The year-to-year comparisons do not include performance of a kidney dialysis and home health-care business that CPC spun off as a separate public company in 1989.

For the fourth quarter, Laguna Hills-based CPC reported net earnings of $20.7 million on revenue of $99.6 million, compared to net income of $16.5 million on revenue of $80.1 million in the same period a year ago.

As the company had forecast several weeks ago, the fourth-quarter results were especially strong because of an increase in patient admissions. CPC officials said that efforts to hold down prices are helping the company compete in an increasingly cost-conscious market.

The gain in hospital admissions marks a turnaround from the first nine months of the year, when CPC’s admissions declined. The earlier decline reflected pressures from medical insurance companies to control health-care costs by encouraging earlier hospital discharges, health care analysts said.

Several health care analysts said CPC appears to have boosted its market share during the fourth quarter by taking business from other institutions that are not as financially sound. They said the company’s aggressive marketing efforts seem to be paying off.

“In this turbulent environment, the strong get stronger,” said John Hindelong, health care analyst with Donaldson, Lufkin & Jenrette in New York. “Community Psychiatric Centers is without a doubt one of the strongest, both financially and operationally.”

Richard Conte, CPC’s president and chief financial officer, said the company has concentrated on keeping its prices among the lowest in the industry. This is possible, he said, because CPC has little debt and shuns expensive television advertising.

“We tend to be $100 to $200 a day cheaper than most of the other corporate chains providing psychiatric care,” Conte said.

Conte acknowledged that CPC hopes to benefit from a “shakeout” in the psychiatric treatment business. “A lot of companies are in financial trouble and this is the year some will go out,” he predicted.

He added CPC hopes to expand by acquiring some of the hospitals that come up for sale as a result of other companies folding.

CPC now operates 50 hospitals in 17 states, Puerto Rico and the United Kingdom. In Orange County, the company operates three facilities in Laguna Hills, Santa Ana and Brea, where it acquired a 151-bed hospital last year from Comprehensive Care Corp.

Last year the company also bought a 174-bed facility in Shreveport, La., from Humana Inc. And a week ago the company opened a 120-bed hospital near Chicago. Conte said yet another CPC hospital is scheduled to open early this year in Little Rock, Ark.

COMMUNITY PSYCHIATRIC’S PERFORMANCE

For the year ended Nov. 30, Community Psychiatric Centers reported earnings of $83.2 million on revenues of $381.8 million.

Figures are in thousands, except per share data.

4th Qtr 4th Qtr 12 Months 12 Months 1990 1989 1990 1989 Revenue $99,610 $80,115 $381,791 $330,724 Net income (loss) $20,735 $16,450 $83,211 $71,961 Per share (loss) $.45 $.36 $1.80 $1.56

* Figures for fiscal 1989 are based on continued earnings and do not include revenues and earnings from CPC’s kidney dialysis and home health care business, which was spun off as a separate company in mid-1989.

Source: Community Psychiatric Centers